Australia passes carbon tax, sets price at $23 a ton

| November 08, 2011

Australia has passed carbon tax legislation. The Gillard government led by Prime Minister Julia Gillard will now implement a plan to cut roughly 160 million tons of carbon pollution by 2020, provide tax cuts, household payments and pensions for homeowners and small businesses affected by the carbon tax, and, as Gillard said in a statement on its passage, this all represents “a major milestone in Australia’s efforts to cut carbon pollution and seize the economic and job opportunities of the future.”

Starting July 1, $23/ton will apply to carbon, a price the Gillard government said will give businesses time to get used to the new system; a system that will affect approximately 500 of the country’s largest carbon producers. “It’s a charge on pollution,” Gillard stated, “not a tax on households or small businesses.”

To offset the carbon tax, the legislation includes a number of measures to ease the transition to a carbon-taxed economy. A household assistant portion of the legislation will “cover, and in many cases exceed,” according to Gillard, “any price rises passed on by businesses.” According to Gillard’s government, nine out of 10 households will receive compensation from a combination of tax cuts and increases to family benefits, and nearly 6 million homes will receive assistance that covers all of the price impacts.

By removing 160 million tons of carbon from the country’s atmosphere by 2020, the country will take the equivalent of 45 million cars off of the road. By putting a price on carbon, the Gillard government said economic growth will happen from the fostering of renewable energy technology, growth that could create 1.6 million jobs by 2020.

During a press conference to announce the legislation and answer a number of questions related to the highly debated legislation, Gillard provided several comments to key questions. “Today,” Gillard said at the press conference, “Australia has a price on carbon as the law of our land … I understand this has been a bitter debate and that there are Australians that still view carbon pricing with a great deal of anxiety.”

Included in that anxiety Gillard spoke of is the potential for businesses to needlessly raise their prices for goods and services. When asked about the potential for baseless price hikes through the example of a taxi company that raised its fees to account for the oncoming carbon tax, Gillard provided assurance that such activity would not only be monitored, but also penalized. “We’ve ensured that there’s a strong enforcement here so that anybody who makes a misrepresentation that a price increase is somehow about carbon pricing but really they’re just profiteering, can face penalties of more than a million dollars.” Anybody who’s thinking of doing the wrong thing, she explained, “should think about how they’re going to feel when more than a million dollars comes out of their pocket.”